NEWS | Wednesday, 05 December 2007

European Stocks drop, led by Nokia; Volkswagen, Royal Bank fall

European stocks declined for a second day, led by technology companies and carmakers, after Nokia Oyj said mobile-phone prices will drop and U.S. auto sales weakened.
Nokia, the world’s biggest handset producer, sank the most in more than two years. Volkswagen AG, Europe’s largest carmaker, and Bayerische Motoren Werke AG retreated. Royal Bank of Scotland Group Plc led banks lower after Morgan Stanley forecast slowing earnings growth for U.K. lenders.
The Dow Jones Stoxx 600 Index lost 1.5 percent to 363.34, bringing its two-day decline to 1.9 percent, as all 18 industry groups dropped except chemical makers. The Stoxx 50 decreased 1.3 percent, and the Euro Stoxx 50, a measure for the euro region, fell 0.8 percent.
The yen rose against the dollar after U.S. Treasury Secretary Henry Paulson said he had no ``silver bullet’’ to stop subprime-mortgage losses from spreading. The risk of European companies defaulting on their debt increased, according to traders of credit-default swaps.
National benchmarks declined in all 18 western European markets. The U.K.’s FTSE 100 sank 1.1 percent, and France’s CAC retreated 1.5 percent. Germany’s DAX slid 0.4 percent. Nokia tumbled 4.4 percent to 26.37 euros, the steepest drop since 20 October, 2005. The company predicted ``some decline'' in industry average selling prices. The shares have gained 25 percent in the past six months.
Alcatel-Lucent SA, the world's biggest telecommunications- equipment maker, retreated 2.4 percent to 5.28 euros. Ericsson AB, the world's largest maker of wireless networks, declined 4.5 percent to 15.30 Swedish kronor.
Volkswagen declined 2.2 percent to 158.24 euros. BMW, the world's biggest luxury carmaker, fell 1.8 percent to 40.86 euros.
Sales in the U.S. auto industry fell 1.6 percent in November, the eighth monthly decline this year. General Motors Corp., the world's biggest automaker, said it will trim production in North America after sales last month fell 11 percent.
Royal Bank of Scotland, Britain's second-biggest bank, slumped 5.3 percent to 439.25 pence. Lloyds TSB Group Plc, the U.K.'s largest provider of personal loans, declined 3.4 percent to 474.25 pence. HBOS Plc, the U.K.'s biggest mortgage lender, retreated 3.5 percent to 772 pence.